Department 2006quarterly Report & Budget Vote 34 Expenditure: briefing

Water and Sanitation

14 March 2007
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Meeting Summary

A summary of this committee meeting is not yet available.

Meeting report

14 March 2007

Mr. F Bhengu (ANC)

Documents handed out:
Strategic Planning and Budget Preview Presentation to the Portfolio Committee on Public Works

The meeting comprised of an opening presentation by the Minister of Public Works, Ms. AT Didiza and a collective presentation by the Department of Public Works. The Minister’s presentation emphasised the alignment of Public Works to the national goal of reducing unemployment, poverty, and underdevelopment. His opening address focused also on the mandate of Public Works as a fundamental handyman and asset manager of the state, a sentiment congruent to the subsequent presentation by the Department. She also briefly focused on issues surrounding the construction industry, national asset management, and building state capacity. The presentation by the Department of Public Works covered several areas considered as pillars of the Department and focused on a clarification of their mandate in providing an overview of their strategic plan and a preview of their budget. The strategic plan covered maintenance, the leadership of the Expanded Public Works Program, their regulatory function, and asset management. Key issues raised by the subsequent discussion included, concerns around the establishment of the state asset registry, the import of Cuban skill assistance in construction, state owned property and private property leasing by the state, and the budget expenditure of skills development and capacity building.
Department Presentation
The Chairperson thanked the delegation from the Department of Public Works for their attendance and gave special attention to the attendance of the Minister of Public Works, Ms A Didiza, and invited her to present an opening presentation as a prelude to the engagement with the departmental delegation.

Ms Didiza thanked the chairperson for his invitation. She said that her ten months in office had allowed her to become acquainted with the challenges faced by the Department. In working with the strategic plan for the Department, she maintained that the pursuit of their mandate was taken into account as well as the experience gained from the previous government in better understanding their mandate and the key components of the department. She said that there was also an attempt to align with the Department’s agencies to ensure that the plan presented to the Portfolio Committee had had input from all those agencies and components.

Ms Didiza argued that the focus of the strategic plan was based on the challenges that had been set in place by government in 2004 on the three main challenges facing the nations. The three challenges were poverty, unemployment, and underdevelopment. The Minister said that the strategic plan also focused on issues highlighted by the President in his state of the nation address, regarding the reduction of poverty. Further more, she claimed that the strategic plan has also taken into consideration the budget proposal and working closer with the provinces to find a collective solution to these challenges. She said the pillars within the Department provided an opportunity to do its best as a facilitating department. For this purpose she argued that the focus on maintenance and the development of a maintenance plan for all departments would be established in collaboration with Treasury. She said that a further component of the Department of Public Work’s mandate has been the building of state assets. Here she said the Department looked at the constraints of rendering this service and admitted that during the planning phase it sometimes takes longer hindering the delivery of infrastructure. The funding model also makes full delivery difficult because some funding spanned three to four years. The minister said that work was being done with treasury and the provinces to establish an infrastructure delivery cycle in order to coordinate planning, funding, and implementation.

Regarding the development of the construction industry, the Minister maintained that the register of contractors had been challenging but necessary to improve the quality of the contractors and highlight the areas of difficulty for contractors. She said that the Department had come up with a national construction development program which would be housed by the Construction Industry Development Board (CIDB). The Minister highlighted the fact that the Department would be working more closely with the provinces regarding construction development centers providing support services to contractors. Working at a provincial level, she argued will help reduce costs to meet the requirements expressed. She alluded to the fact that the Department has also appointed a new CEO. Regarding asset management, she said that the concern regarding the asset register would be addressed by the plan to enhance the asset register. She said also that an amnesty initiative would be pursued to reclaim assets un-accounted for.     

Addressing the issue raised regarding the strengthening of inventory capacity, the Minister said that the Department was currently involved in bar-coding state assets. Secondly, regarding the maintenance of assets, she said that there were possibilities for job creation such as the maintenance of Robben Island. She said that the National Youth Service was consulted with regard to this to establish job creation for around 5000 of people on building and maintenance. Regarding the disposal of state assets, the Minister said it was important to adopt a policy guiding with the disposal of commercial assets and assets not central to the needs of the state. This policy was being considered. She said the challenge of building infrastructure using labour intensive work as a way of creating employment was the mandate of the Department. Here she maintained that they had considered ways of accelerating and expanding the implementation of the Expanded Public Works Program (EPWP). She said that with regard to the CBE (Council for the Built Environment) close work was being done with Universities and bilateral support in order to deal with the skills gap in this sector. Regarding the building of human settlement she said the Department would be working with other departments such as the Department of Housing. The minister emphasised the employment of youth, women, and the disabled but argued that the reason for the shortfall in employment of the disabled was due to the nature of the labour created by the Public Works. However, efforts to improve access for disabled persons in state buildings had been made. Finally the Minister pointed out that regarding the construction charter the Department was eager to find ways to assist in this implementation of the charter and building state capacity.   

Following a short break, the Chairperson invited the Department of Public Works to begin their presentation.

Mr B Zulu, Acting CEO, presented the strategic plan and budget preview, which was largely congruent with the opening presentation by the Minister. His presentation provided a brief context for the strategic plan (see documents). The presentation highlighted the Department’s interpretation of its mandate as being the “handyman” of the state, providing leadership for the EPWP, being the regulator of the industries and professions under its jurisdiction, and finally the asset management on behalf of the state. Regarding their status of the states “handyman” the presentation alluded to the development of the National Infrastructure Maintenance Strategy (NIMS) where efforts were made to combine the goals of ASGISA and the EPWP.

As the leader of EPWP their mandate focused on the eradication of poverty, unemployment and underdevelopment. Here they had planned a strategy including the three spheres of government, SOE’s and the private sector. A notable component of this plan was the commitment to employing 5000 young people in their building maintenance program in the 2007/08 financial year. The presentation also pointed to the implementation of the Department’s building program which amounted to R2.9 million in identified projects for 2007/08. Regarding the Department as a regulator, the Department notably alluded to the implementation of the national contractor development program through and in line with the CIDB and the CIDB Act. The presentation also highlighted plans for ensuring a constant supply of adequate built environment resources (see documents). Other factors of regulation such as the focus on the transformation of the property sector to deal with deracialisation, and the extension of Government-wide Immovable Asset Management (GIAMA) where assistance would be provided to provincial and national departments in understanding their role were highlighted. Regarding the DPW as asset managers, Mr. Zulu’s presentation understood asset management as the ensuring that immovable property owned and/or utilised by the State for delivering various government services yielded functional, economic and social benefits to the State. The presentation highlighted its plans to assist the state in this regard (see documents). Apart from these basic pillars the presentation highlighted the Department’s commitment to establish skills development through internships, leaderships and external bursary programs focusing on the built environment, and reducing the vacancy rate in the department. The presentation then looked at the projected budget (see document for tables) and pointed out key developments affecting the budget. These developments included: refinement of budget devolution and the introduction of accommodation charges that commenced in 2006/07 financial year GIAMA where there was a focus on more systematic planning and  prioritisation of the building program budgeting; implementation of the National

Infrastructure Maintenance Strategy; and the delaying of envisaged devolution of  property municipal rates to the provinces. It was however, envisaged that the latter process would be finalised in the 2008/09 financial year. Finally the presentation reflected on the budget allocation and emphasised that over the next financial year, there had been a notable improvement in the baseline allocation on the following items, details of which were set out in the vote (see documents).

The Chairperson thanked the presenter and opened the floor for discussion.

Mr J Blanche (DA), regarding the Property Management Trading Entity (PMTE
) estimates and the leasing of land used by the departments, asked how much longer was government going to continue leasing these buildings from the private sector and asked if it should rather build its own buildings to save on leasing expenditure. Secondly he asked why the department was sourcing skills from Cuba. Finally regarding the employment of 5000 young people, he asked if it was manual labour or the transfer of skills that was being created.  

Mr Maduma (ANC), regarding skills development, asked for further clarification on the process. Regarding reducing the vacancy rate, he asked if there was assurance of the Department’s ability to fill these vacancies in order to build capacity, and if the 5000 youth job creation was linked to this. If the latter was linked to the 5000 job creation, Mr Maduma asked if there was an incubation program.

Mr Radebe concerning the leasing of private sector building asked if the committee could provide the list of the private sector members the government was leasing from. Specifically he asked how many previously disadvantages private sector members were benefiting from this. Regarding the property industry, Mr. Radebe asked if the Department was serious about transforming the property sector why the investments in this area was so low, a mere R9.8 million, and how the money would be distributed. Regarding EPWP, he asked why, of the R267 million from the national budget allocated to this program, only R71 million was indicated in the presentation’s budget.

An ANC committee member asked how long the EPWP enhancement process was going to take. She also pointed out that there was no mention of the property sector charter. She said that the national department asset register was not being improved adequately. Finally she said that DPW needed to be involved in piloting in each province to increase the trust in other departments to utilise the DPW. 

Mr Molefe (ANC) asked how the Department was going to develop a strategy including the three spheres of government, the SOE’s and the private sector to eradicate poverty. On increasing staff for capacitating their leadership role, he asked how this was going to be done, bearing in mind the differing staffing capacities across the spheres of government. On external bursary programs, he asked who would benefit from this process and whether it addressed the shortage of skills in the built environment. Lastly, regarding military bases, Mr Molefe asked if the maintenance program covered the electricity usage on the bases which was on all the time.

Mr Zulu, concerning the management of the Department’s debtors, argued that the Department did rent out state facilities but their management of the recovery of that debt was a challenge. Regarding leases he argued that it may not make sense for government to build every facility it needed but rather the cost had to be optimized via the private sector; but regarding capital works budget he argued that R126 million was set aside to build infrastructure such as the government boulevard in Pretoria. However, he said determining the optimum balance was difficult. On Expanded Public Works Program, he said the national budget of R265 million was dedicated over three years not one year, which translated to the discrepancy identified by Mr Radebe.

Mr Blanche said that, regardless of the optimum balance, if a department settled in a building for too long it should consider building its own infrastructure, and that  the situation of the building should be considered using the example of congestion and high prices in the city center.

Ms Mbine (National Treasury) argued that the EPWP was a flagship program and thus could only be supported to the extent of building capacity within the Department; recommendations were based on limited information. She said it was thus difficult to adopt commitments if there was no long term plan in place. Regarding border control co-ordination activities she argued that role of EPWP was capitalisation of border posts. She said that what was reported by the DPW to the committee was different to that reported to Treasury regarding this. She argued that while funds were dedicated to public works on this matter it was for the purpose of the border posts. She said she was confused by the fact that some of those funds were put into other projects. Ms Mbine was concerned about the accountability of the R1.3 billion dedicated to border control, especially with the World Cup in mind.

Thirdly, she argued that increased funding to CBE was to fund goods and services. She could not understand why there was an increase from a requirement of R9 million to R18 million. Regarding buildings she said it would be better to have government departments in the city center and should the department build their own or lease was the important question. Regarding prestige building, Ms Mbine said that public works had the funds to accomplish this but the example of the union buildings and the retraction on security building freed up some money, and she wanted to know where this money was going to. Finally, regarding PMTE, she said that section 19 of the treasury regulation a PMTE needs an identifiable head that reports to the accounting officers of public works, and she complained that it did not exist in the Department.

The Chairperson made a proposal that the issues raised by the Treasury be noted but that it was the wrong forum for these issues to be addressed. He said that an interaction between the two departments needed to be made outside this platform and requested that it be dealt with in this manner.

Mr Zulu said that the list of leasers would be made available to the committee.

Mr Mathobela said that R30 million had been given to the Department for the asset register enhancement. This did not mean that there is no data register, rather steps had been taken to improve and maintain the integrity of the data. They were involved under the GIAMA Bill to provide a user asset management plan. Even before the promulgation of the Bill the Department had been proactive in producing about 80% of the planned user asset management plans. On the issue of the National Infrastructure Maintenance Strategy, he said the Department had drafted a prioritisation criterion for every project. Priorities included National Youth Services, and compliances with security measures etc. On border control he said there were 54 points of entry and funds were to be utilised for capital works, acquisition, maintenance, and the renewal of ICT systems etc. Finally on the National Infrastructure Strategy, he said the Department also leveraged the other existing projects.  

Mr Magubane, referring to the asset register, asked if the enhancements were cutting across all departments. He was concerned about the R886 million allocated for the building of state property, and asked how government would be assured about the state assets if there was no registry.

Mr Mathobela reiterated that the enhancement process was 80% complete, however, regarding the issue of the register, he said there was one challenge - the incompatibility of systems across the spheres of government. The new software program “E-works” was however going to enable inter-operability.

The chair asked how long the reconciliation process alluded to would take to reach fruition.

Mr Mathobane said it should be completed by the end of the calendar year. 

Mr. Zulu said that all aspects of the registry process cannot be addressed by public works. He said that land affairs needed to address the vesting issue, and only the capturing of data could be done by DPW.

Mr Gxilishe (Deputy Director-General, DPW) dealing with BEE leasing beneficiaries said one of the roles of the Department was the eradication of poverty which related to these beneficiaries. The Department would be able to provide the facts regarding the leasers but the beneficiaries of these would most likely not be composed of the previously disadvantaged due to the previous government’s legacy and the subsequent ownership of land. He used the example of BEE ownership of buildings in Bloemfontein, which was miniscule. He claimed that the department and government in general was strongly in favour of the transformation of the property market but it was a complex process. Mr Gxilishe argued that the previously disadvantaged will not be able to partake in the property market unless active state intervention is enabled. Regarding the eradication of poverty he said the government benchmark for 2014 to halve unemployment and poverty was an opportunity for the DPW because it was strategically located to intervene in and disable the persistence of the schism of the first and second economy by providing a platform for the previously disadvantages to transcend the second economy. He argued that through the EPWP a huge impact could be made on the eradication of poverty.  

Mr Dlamini on private leasing argued that in Pretoria all property had been identified. He said that 80% of the buildings were occupied by the private sector. He argued that if a balance proposed was achieved it might lead to a high property vacancy which could facilitate criminal activity for example via porn shop and lone shark perpetuation. He said that empowerment on facilities management in government owned buildings might lead to long term job occupation for youth. Finally he said that Pretoria was currently involved in piloting the program for state run of buildings and if all goes well it could be rolled out in other provinces.  

Mr Moroka, regarding the national youth service, argued that it was not a new initiative and formed part of the Expanded Public Works Program, which included building maintenance. He said the aim was to create artisans, and targeting unemployed graduates in the built environment. He maintained that the intention of the program was to absorb at least 500 of these 5000 youth. Regarding the issue of the allocation to the EPWP, he could not understand the confusion brought up by Treasury because the understanding was that there were two levels of funding. This included capacity building of the unit coordinating and providing leadership to the other spheres of government and the amount had grown over the past two years. Furthermore additional funds were utilised for work with the line departments, social development, and provinces. Regarding EPWP at provincial level and coordination of structures across provinces he argued that provinces also had the mandate of EPWP in their own provinces so they had created their own capacities. He concluded that as the Department of Public Works a conscious decision was taken to work closely with regional offices thus he argued that part of capacity building was decentralising at a national level. In terms of the support for the municipalities he claimed that technical capacity had been created that will be provided to these municipalities to be EPWP compliant.

The Chairperson then suggested a recess for lunch.

Following the recess the Chairperson invited the Department to respond to the earlier questions.  

Responding to concerns regarding the transformation of the property sector, the respective delegation member expressed concern and admitted that the pace of transformation was too slow. She said that government should at least address its responsibility and role property transformation. Secondly, regarding the youth foundation, she said that it was established in 2004, and that the challenges of skills in the construction sector was attracting youth into this sector. She said that an initiative targeting learners between 12 and 15 had been initiated in 108 schools to attract them to careers in the built environment. She pointed out that there was great support from the industry for this initiative. A further sector skills development strategy was alluded to based on the success of the school based program. She said the program was still running and that 80 contractors were currently involved, and that a 50 projects to the value of R100 million have been developed to incubate recruitment and skills. Mentorship programs were also highlighted adding the incubator programs.

Mr Maduma, regarding the budget increase of R19 million for internship programs asked how long it took for the department to employ members in key positions from these programs.

Mr Blanche expressed concern over the sourcing of skills from Cuba. He said that the personnel would not be orientated to South African. Thus he asked if it would not be better to send South Africans to Cuba for training. Mr Blanche said that skills sourcing should bring knowledge into South Africa that could be sustained and transferred to others. Secondly, regarding the EPWP, Mr Blanche said that there were problems of getting the program off the ground. He said that coordination at the provincial and local level was adequate, but he highlighted that the program was intended to be located in the Presidency, which allowed for a proper hierarchy of oversight and command.  

A question was raised regarding the staff retention strategy of the DPW. The respective member asked what strategies had been put in place to retain the staff of the DPW. Secondly she asked what the plans were for the maintenance of the transport system.

Mr Gogotya asked whether empirical studies had been conducted to determine if the Cubans that were currently involved in the Western Cape government had been successful and what problems or impediments were present.

Mr Zulu, in response to the question on public transport said that the department was funding and planning part of the multi-model transport master plan. Regarding the increase of R19 million in the budget for internships and filling of key positions, Mr Zulu said a plan was in place but several challenges still exists especially for the built environment. Finally regarding Cuban skills, he said that there were just no built environment professionals in the department. He argued that the Cuban exchange program was aimed at addressing this shortage. On the retention of personal, he said that over and above special remuneration programs, the department has also pursued the option of uniform grading, because each province has its own unique grading systems and some managers from differently depending on the province they originate from. He admitted that staff retention was a problem because unique incentives could not be established beyond those provided. However, he said that the advantage of working in the department was the potential for resources to further ones education through the various programs. Finally regarding the Cuban participation in the Western Cape, outcomes were favorable.

Mr Blanche said there was increasing centralisation of local government, and this could possible free up previously occupied building. He asked if the Department had consulted these sources of property, before the private sector was tapped into. He said that the city centre should be occupied by business and that government should consider occupying more outlying areas such as Soweto for public service.

Disagreement was expressed from the committee regarding the occupation of property in the city center. The respective committee member argued that the public services being situated in the city center allows for greater access. She argued that some businesses are migrating from the city center and thus public services should not be removed lest the city center be depreciated.

A member of the committee argued that the issue around the city center was too complex for government and departments to deal with alone. He said a combination of government and business was needed to provide a solution. He said that something over and above what government could do was needed to attract people to the city center.

The Department responded by pointing out the three critical development pillars that needed to be consulted. These included the local Integrated Development Plan to influence growth and development strategies, which had to influence the national spatial development strategy. He said that unless there was integration between the development paths in the country he said it was going to be difficult to obtain a conclusion and consensus regarding the developmental path being taken. Regarding the vacancy of Deputy Director-General, it was pointed out that the Department would fill this vacancy in the next 14 days. Regarding 2010, a decision had been made to carry forward the inter-ministerial committee on 2010. It was pointed out that a particular sector in the DPW was being developed to focus entirely on issues regarding the 2010 world cup.

The Chairperson thanked the respective delegations and requested that a report back should be provided regarding issues raised between National Treasury and the Department of Public Works.

The meeting was adjourned.   



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